Finance Minister AMA Muhith yesterday said the tax rate for the corporate companies would be reviewed in the budget for the fiscal year 2014-15.
“Corporate tax would be reviewed in the coming budget and we are working on it,” he told reporters at the National Board of Revenue headquarters in Dhaka. He did not, however, elaborate the possible changes.
Meanwhile, the NBR Chairman Md. Ghulam Hussain said the decision for making the changes has not been taken yet as assessments are going on in this regard.
Different trade bodies have long been urging the government to reduce the corporate tax for both publicly listed and non-listed companies, and the government has already dropped a broader hint that it would reduce the rate to stimulate investment in the country as a strategy to boost economy.
The indication emerged after the businessmen proposing for the exemption to recover from the setback they suffered due to political turmoil before the January 5 national election.
Attending the pre-budget discussions with NBR, business leaders have urged the NBR to reduce the corporate tax rate claiming that the rate is highest among the South Asian countries.
According to a KPMG conducted “Corporate and Indirect Tax Rate Survey 2014,” the corporate tax rate in some South Asian countries are 20% in Afghanistan, 27.5% in Bangladesh, 28% in Sri Lanka, 33.99% in India and 34% in Pakistan.
Currently, the tax rate for the corporate companies in Bangladesh now varies between 27.5% and 45%.
Addressing a press briefing earlier, NBR Chairman Md. Ghulam Hussain has said the government will gradually lower the corporate tax rate from the existing 37.5% and bring it to the level of individual tax rate of 25% in the coming five years.
Commenting on the matter, a high official of NBR told the Dhaka Tribune: “Slashing down corporate tax rate, which generates around 65% of the revenue for the country, will create a revenue loss of at least Tk6,000 crore in a financial year.”
Former NBR Chairman Muhammad Abdul Mazid has opined that the government should opt for alternative methods to cover up the revenue losses by expanding the tax net.
“Before lowering the tax rate for corporate companies, NBR has to ensure that the revenue losses to be incurred would be compensated through taking effective measures like plugging of loopholes in the tax system, and expansion of the income tax base,” he said.